Search - consideration

CRA noted: s. 110.6(14)(f)(i) provided that, for purposes of the requirement in s. 110.6(1)(b) that the shares must not have not been owned during the 24 months preceding their disposition (the “determination time”) by anyone other than the disposing individual or a related person or partnership, such shares will be considered to have been so owned prior to their issuance unless they were issued as consideration for other shares (the “original shares”). however, s. 110.6(1)(e)(i) required that throughout the period beginning 24 months before the determination time and ending at the time of the share exchange (the “substitution”), the original shares were not owned by anyone other than the individual or a related person or partnership; and that s. 110.6(1)(e)(ii) required that the original share had qualified under the asset and activity test described under para. ... Regarding a sale of the shares after Step 4, CRA indicated that the test in s. 110.6(14)(f)(i) would be satisfied since “Amalco would issue the shares of its capital stock in consideration for the shares of capital stock of Opco (to Mr. ... Similar considerations applied to a sale by Mr. Y, except that his Amalco shares replaced only Opco shares. ...

29 October 2013 External T.I. 2013-0507881E5- Price adjustment clause-- summary under Effective Date Summary Under Tax Topics- General Concepts- Effective Date A price adjustent clause in the share provisions for preferred shares issued by Opco to the taxpayer in Year 1 in consideration for the transfer of property to Opco provide that the redemption value of the shares issued will be changed if the FMV of the consideration for the shares is determined by CRA to be different than the determination at the time of the transaction (or an additional amount will be paid if the change is upward and the preferred shares issued are redeemed before the determination by CRA). ...

29 October 2013 External T.I. 2013-0507881E5- Price adjustment clause-- summary under Subsection 84(3) Summary Under Tax Topics- Income Tax Act- Section 84- Subsection 84(3) price adjustment payment recognized as s. 84(3) dividend when received A price adjustent clause in the share provisions for preferred shares issued by Opco to the taxpayer in Year 1 in consideration for the transfer of property to Opco provide that the redemption value of the shares issued will be changed if the FMV of the consideration for the shares is determined by CRA to be different than the determination at the time of the transaction (or an additional amount will be paid if the change is upward and the preferred shares issued are redeemed before the determination by CRA). ...

X transfers all his common shares of Opco to Opco in consideration for preferred shares of Opco and, at the same time, Holdco subscribes for common shares of Opco. ... X transfers all his common shares of Opco 1 to Opco 1, and of Opco 2 to Opco 2, in consideration for preferred share of Opco 1 or Opco 2, as the case may be and, at the same time, an inter vivos trust for the minor children of X ("Trust") subscribes for common shares of Opco 1 and Opco 2. ...

A, for nominal consideration, 1 non-voting Class B preferred share, which is redeemable and retractable “for the fair market value for which it is issued” and entitled to discretionary dividends as and when declared. ... A as consideration for the share does not represent the fair market value of such share at the time of subscription.” ...

Its issued share capital consists of 1,000 Class A common shares and 1,000 Class B common shares held by two unrelated holdcos (Holdco1 and Holdco 2), who had subscribed for their shares on incorporation for nominal consideration. Opco repurchases all the Class B shares for $1M (Alternative 1) or Opco pays a discretionary dividend of $1M to Holdco 2 and the repurchases the Class B shares for nominal consideration, with the FMV of the Class A shares remaining at $1M, and the FMV of the Class B shares reduced by the dividend amount (Alternative 2). ...

CRA responded: The relevant exclusions are: …Paragraph (m) – if the interest in the non-resident trust was not acquired for consideration by the taxpayer, or certain other persons. The employee’s interest in the Super Fund does not meet this exception because the employee’s contributions to the Super Fund constitute “consideration” for the acquisition of the interest in the trust. ...

23 April 2009 External T.I. 2008-0301241E5 F- Fiducie d'invest. à participation unitaire-75(2)-- summary under Subsection 75(2) Summary Under Tax Topics- Income Tax Act- Section 75- Subsection 75(2) s. 75(2) generally not applied to commercial unit trust where single class of units subscribed for on FMV terms Units of a unit trust (“UT”) that does not qualify as a mutual fund trust (“MFT”) are issued for monetary consideration to subscribing unitholders (three arm’s length CCPCs) as a subscription price corresponding to the units’ fair market value. ... After noting that s. 75(2) “would lend itself to application” here unless the trust generated business income, CRA went on to state: [T]he CRA would not systematically consider subsection 75(2) applicable with respect to situations involving the issuance of units of a trust that qualifies as a UT without qualifying as an MFT, particularly in situations where the following conditions are satisfied: the issue of units by a UT to a taxpayer is made in the context of an investment by the taxpayer in exchange for monetary consideration corresponding to the fair market value of the units issued, the tax elections that may be made by the trust, such as those provided for in subsections 104(13.1) and 104(13.2), must be capable of being made only in such a way as to result in uniform tax implications for all beneficiaries owning units with the same rights, privileges, conditions and restrictions; and there are no terms and conditions linking the units to any asset or class of assets of the trust. ...

15 January 2021 External T.I. 2020-0847781E5- CEWS- remuneration / SSUC- rémunération-- summary under Eligible Employee Summary Under Tax Topics- Income Tax Act- Section 125.7- Subsection 125.7(1)- Eligible Employee non-cash taxable benefits are not “eligible remuneration” for CEWS purposes, but are “remuneration” for “eligible employee” purposes Q.1 Are taxable benefits taken into consideration in determining whether the 14 day remuneration condition is met and, if so, how is a particular portion thereof determined to be in respect of particular days in a qualifying period? ... Q.3 Is there is a difference between remuneration that has to be taken into consideration for the 14 day remuneration condition and the “eligible remuneration” paid to an employee to calculate the CEWS? ...

. … [W]here it can be determined … that the option is granted in consideration for services that are to be rendered after the time of grant and upon the fulfillment of a condition or contingency, the income should instead be recognized when the services are rendered, the amount is quantifiable and the rights are unrestricted. … [Here] the vesting of the option is linked to the completion of the long-term research project. As such, it may be difficult to conclude that the income is earned before the vesting date under the particular arrangement. … [G]enerally, it is at the time where the services have been rendered and the contingency has been fulfilled, that the FMV of the underlying share over the aggregate of the exercise price of the option should be included in income under subsection 9(1). … … Where the facts indicate that the incremental value represents part of the consideration received by the taxpayer for consulting services rendered, the incremental value should generally be treated as business income for purposes of the Act. ...